Economics & Politics最新文献

The Trump administration imposed tariffs on Chinese imports starting in 2018. American firms that rely on Chinese imports were allowed to apply for exclusions for products. In this paper, we investigate political factors affecting the approval rates for these tariff exclusions. We also consider factors that may impact this estimate, such as firm selection into requesting and legitimacy of request. We find that tariff exclusion is increasing in the Republican vote share. Counties with a 10 percentage point higher Republican vote share experience a 10% higher probability of tariff exclusion approval.

A government sets the level of taxation to provide a public good valued by consumers. There are two groups of consumers, the rich and the poor. The government has redistributive preferences, but is initially constrained to use lump-sum taxation. This potentially leads the government to provide a very low level of the public good out of concern for not reducing private good consumption of the poor. In this context, allowing a small amount of redistribution from the rich to the poor may be Pareto improving. The loss in private consumption by the rich may be more than offset by the added utility from increased public good provision. I also analyze the extent to which a flat income tax can induce the government to choose a level of public good consistent with the Samuelson condition. When consumers have a survival constraint on private consumption, a progressive tax code is required to induce the government to choose the efficient level of the public good. Generally speaking, there is a trade-off between a desire to restrain the government's ability to redistribute income and a desire to induce it to choose the level of the public good implied by the Samuelson condition.

Using a manually collected data set of Chinese publicly traded firms from 2010 to 2017, this study examines how public–private partnerships (PPP) affect the cost of debt and financial reporting. We argue that a firm gains political capital through a PPP and thus may access debt markets at a lower cost. Consistent with our expectation, we find that participants of PPP enjoy significantly lower bank loan interest rates than other firms. This is more pronounced for nonstate-owned enterprises, for firms without politically connected CEOs, and for loans from state-owned banks. However, these participants reduce their accounting conservatism, suggesting a substitution between financial reporting and political connections. Also, participating in PPP does not improve firms' financial performance. Thus, the lower interest rates are not justified by economic fundamentals or financial reporting quality. Overall, our study suggests that PPP distort state-owned banks' lending decisions and lower accounting conservatism, highlighting the potential cost of PPP to society.

This paper analyzes the impact of status seeking behavior on the growth of income. Conventional wisdom suggests that such behavior should stimulate the growth rate. We introduce a general status indicator as an average of relative income and another that reflects relative expenditure on a status good in a simple dynamic model. We show that the conventional approach, which includes only concern for relative income, matters for growth. Otherwise, higher relative expenditure on a status good does not have any additional impact on optimal growth beyond the golden rule. Thus, the accepted wisdom that relative status concern always stimulates incentive for growth is called into question and provides fresh policy perspective.